Apple Reportedly Negotiating to Use BMW i3 as Basis for its Own Electric Car

Apple and BMW have engaged in negotiations over Apple’s interest in using BMW’s i3 electric cars as a basis for its own electric car project, according to a new report from German publication. […]

Apple executives recently met with BMW in Leipzig, Germany to visit the carmaker’s i3 production line. Apple is allegedly interested in the carbon fiber body of the i3, according to the report.

If this is correct, let’s consider the possible extent of this relationship. The two relevant terms above are basis and carbon fiber body. For a moment, let’s consider what basis implies, rather than be limited by the mention of the carbon fiber body.

Basis could refer to one or more of the following:

Chassis / wheelbase

Carbon fiber frame

Carbon fiber body

Powertrain

Steering / braking

Suspension/stability elements

Technology or process related to the above*

So, basis covers a range of technology areas. The actual Apple-BMW relationship may be much more focused, because of the potential rivalry between an Apple Car(s) and BMW cars. The arrangement might indeed be limited to the carbon fiber body technology or process*. There’s really no way to tell at this point.

We can probably exclude, however, elements like the cabin interior, batteries, most electronics, sensors, computers, transmitters/receivers, user interfaces, and most software. These are areas for which Apple likely has a unique vision (e.g., the interior and related interfaces) or unique technology (e.g., the car operating system or its batteries, perhaps).

If BMW and Apple reach an agreement, the likely benefit to Apple would be:

Engineered and tested high performance components.

Indirect access to an automotive manufacturing base.

Indirect access to an automotive supply chain.

Even within the context of a specific area (e.g., carbon fiber technology or process*) it’s not clear if BMW would simply be a supplier/competitor (like Samsung), or if BMW and Apple will co-develop any future technologies in the area. It would be reasonable to assume that the competitor aspect precludes any co-development. That’s just playing the odds; reality may differ.

More interesting than scope and benefit of such an Apple-BMW deal is the question of “why”: Why would Apple work with BMW? If the rumor is correct, then Apple’s objectives may be to:

Re-use parts or sub-systems in areas where it can’t add value today.

Maximize the odds that the car will be ready by Apple’s target launch date, rumored to be 2020.

Reduce development costs. (I’m including manufacturing set-up and supply-chain configuration in this.)

Accomplish the above with a partner that delivers high quality components.

It’s likely that Apple would compensate BMW by licensing the process* or technologies it uses. And, potentially, Apple may provide capital for related tooling and manufacturing capacity, if BMW-related facilities are involved.

As we consider the mix of Apple’s own capabilities, along with capabilities it sources from current suppliers, and new capabilities that it will need to buy or license, it’s worth asking: what is the minimum viable product that Apple would consider launching? Meaning, what jobs or problems does Apple want to address with its car, and what level of performance does it want to reach in the first version? … If or when it launches a car.

At this point, we don’t know what we don’t know. It’s likely that other developments will surprise us in the future. But this is exciting to think about, quite honestly. If you have other thoughts, I’d love to hear them.

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*Added this to clarify that Apple would not necessarily use “as-is” elements from BMW. Got the idea to clarify that after a spot-on Tweet by Horace Dediu, who runs and writes Asymco.com and works at the Clayton Christensen Institute.